Norwegian energy company Statoil in 2006 signed an agreement with the petroleum minister to develop a full-scale carbon capture facility at its Mongstad refinery. Statoil led a government-funded program designed to capture CO2 from the refinery though it said a "change in direction" was needed for a project expected to cost $500 million.

Norwegian Energy Minister Ola Borten Moe said the government was still committed to a low-carbon agenda but was putting Mongstad on hold.

"The government has ... concluded, after careful consideration, that the risk connected to the Mongstad facility is too high and has for that reason decided that the work on the full-scale facility will be discontinued," he said in a statement Friday.

Edlar Saetre, executive vice president for renewable energy at Statoil, said carbon capture and storage was an important technology for the industry.

The International Energy Agency said CCS technology could cut carbon dioxide emissions from the industrial sector as much as 4 gigatons by the middle of the century.

"In Statoil we will press on with our technology development efforts in this area," the Statoil executive said.

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